MIBCO Main and Administrative Collective Agreements Extended to Non-Parties
The Minister of Employment and Labour has declared that the Main Collective Agreement and Administrative Collective Agreement which were concluded in the Motor Industry Bargaining Council (MIBCO) be extended to non-parties. This means that the conditions specified in these agreements shall be binding on the parties who concluded the agreements and on all other employers and employees in that industry.
The agreements deal with matters such as the new wage dispensation for the industry flowing from 2025 collective bargaining negotiations and will come into effect on Monday 22 December 2025 and remain in effect until 31 August 2028 for the Main Collective Agreement and 31 August 2030 for the Administrative Collective Agreement.
Key Implications
The impact of these changes is substantial and is structured around six key themes.
- New Earnings Threshold and Provident Fund Compliance
The agreements enforce a stricter compliance regime regarding social security benefits, pivoting around the new earnings threshold of R261,748.45 per annum (approx. R21,812 per month). The following furthermore comes into effect:
- Mandatory membership: Employees earning at or below the above threshold must belong to the Autoworkers Provident Fund (AWPF) or Motor Industry Provident Fund (MIPF).
- Voluntary overtime clause: A critical protection for employees earning above this threshold is introduced in Division A, Clause 1(3)(c). These employees cannot be compelled to work overtime; any overtime worked must be voluntary and free from coercion.
- Compliance action: Employers must immediately audit their payroll to identify employees who have crossed into or out of this threshold, as their benefit structures and overtime obligations have legally shifted.
Sector 5 (Fuel Retail): The Medical Insurance Shift
The Administrative Collective Agreement introduces a landmark shift for Sector 5 (Fuel Retailers) under Clause 15, aiming to formalise healthcare access. This includes:
- Implementation target: The industry is moving towards a mandatory “primary medical insurance option” by 01 February 2026.
- Healthcare allowance: To support this implementation target, a healthcare allowance has been structured into wage increases:
- Payment rule: This allowance is unbundled from the base wage. It must be paid directly to the employee as part of their earnings.
- Prohibition: Employers are explicitly prohibited from paying this amount over to MIBCO as a return. It is a direct cash component intended to subsidise the employee’s future medical insurance costs.
- Strategic impact: This moves the sector away from state reliance towards a private/industry-funded primary care model, likely reducing absenteeism in the long run but increasing immediate administrative complexity for payroll.
- Wage Exemptions: Strict New Procedures
The Wage Exemptions Board (Administrative Agreement, Clause 5) has been granted sole jurisdiction over applications to pay lesser increases. The procedure is now far more rigorous:
- Deadline: Applications must be lodged by 21 January 2026.
- Consultation requirement: Employers cannot simply plead financial distress. The application must include proof of consultation with employees and trade unions. A mere notification is insufficient; substantive engagement is required.
- Financial disclosure: “Formal financial information” is mandatory. The Council’s auditors will attend hearings to interpret this data, meaning that vague financial statements will likely lead to rejection.
- No “minimum wage” exemption: Applications to pay below the prescribed minimum wage (as opposed to exemption from an increase) will not be accepted.
- Operational and Definition Updates
The Main Collective Agreement (Division A, Clause 2) refines several key definitions that impact how roles are classified and remunerated:
- Cashier (Grade 2): This is now explicitly defined to include responsibilities for “drop safe activities” and balancing financial transactions, clarifying the scope for filling station staff.
- Char (Grade 1): The scope has been expanded to include “polishing motor vehicles by hand” and washing/vacuuming in auto valet establishments. This prevents employers from classifying higher-grade valet staff as simple cleaners if they use machine tools.
- Temporary Employment Services (TES): Strict limitations remain.
- Sector 5 prohibition: Fuel retailers are prohibited from having any of their core workforce belong to a TES.
- General limit: For the rest of the industry, TES usage is capped at 35% of the core workforce.
- Leave and Social Welfare (Clause 5)
The Agreement aligns with recent legislative updates regarding parental rights:
- Other parental leave (Clause 5.4): The update formally incorporates the ten (10) consecutive days of parental leave, applicable to fathers and non-birthing parents, replacing the old three (3) days of family responsibility leave for birth.
- Family responsibility leave (Clause 5.5): This remains applicable in the case of illness of a child or death of immediate family members, but the “birth” provision has moved to the new parental leave clause.
- Allowances and Deductions
These are as follows:
- Travel and Subsistence:
- Subsistence (S&T):84 per night.
- Accommodation:97 per night (if not provided).
- Standby and Call-out:
- Standby:10 per shift.
- Call-out:82 per incident.
- Deductions (Clause 3.9): The Agreement reiterates that deductions for damages (e.g. to vehicles) are capped at 30% of weekly/monthly earnings and require a fair procedure. Traffic fines can only be deducted if the driver is identified “beyond doubt” and the vehicle was roadworthy.
Strategic Recommendations for Employers
Employers are encouraged to review their employment contracts to ensure that all Sector 5 employment contracts reflect the new healthcare allowance structure to avoid future disputes about “unilateral changes to terms”.
If you utilise labour brokers, verify that you are within the 35% cap (or 0% for Sector 5) to avoid deeming provisions where those workers become your permanent employees. If you intend to apply for exemption, begin the financial audit and employee consultation immediately.
The 21-day window is unforgiving. Study the collective agreements carefully and make sure that you are fully compliant to avoid being faced with any penalties by the Bargaining Council.
